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Monday, January 30, 2017

Latest Data Show Weakening Contribution Of Net Exports To GDP Growth

Friday's data release from the Bureau of Economic Analysis
shows US GDP growth slowing from a 3.5 percent annual rate in the third
quarter to just 1.9 percent in Q4. One factor behind the slowdown
deserves a closer look - the declining contribution of net exports to
GDP growth. (The usual caveat applies to all the numbers reported in
this post. This week's data are "advance" estimates, subject to
revision. The average revision of GDP growth from advance to final
estimate, without regard to sign, is a substantial 1.1 percentage
points.)

The chart shows that the
contribution of net exports to growth was positive during the middle
years of the recovery, and had just begun to turn positive again after a
dip in 2014 and 2015. Because the net export component of growth is
volatile from quarter to quarter, I have drawn the chart to highlight
the four-quarter moving average, with the actual quarterly data in the
background. Whether we look at the quarterly data or the moving average,
though, it is clear that the hopeful trend toward stronger net exports
was reversed in the last quarter of 2016. . . .

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